Blink Charging Co. — 2018 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2018, compared with 2017. This is an annual report; it does not provide standalone fourth-quarter results. Filed April 1, 2019.
Business context
Blink owns and operates EV charging stations and provides charging equipment, network software, and related services. Its business models range from Blink-owned stations, where Blink retains most charging revenue, to host-owned equipment connected to the Blink Network. Revenue primarily comes from public charging, equipment sales, network and warranty fees, grants and rebates, and alternative-fuel credits. As of March 25, 2019, the company reported approximately 14,583 stations deployed, with some operating on other networks or not networked.
Key financial metrics
| Metric | 2018 | 2017 |
|---|---|---|
| Revenue | $2.69 million | $2.50 million |
| Gross profit / gross margin | $0.90 million / 33.6% | $1.05 million / 41.8% |
| Operating loss | $11.61 million | $7.42 million |
| Net loss | $3.42 million | $75.36 million |
| Net loss attributable to common shareholders | $26.88 million | $79.63 million |
| Cash used in operations | $13.42 million | $2.55 million |
| Cash and cash equivalents at year-end | $18.42 million | $0.19 million |
| Working capital | $15.59 million | $(34.76) million |
| Gross notes payable | $0.29 million | $5.10 million |
Accumulated deficit was $159.86 million at year-end. Year-end total liabilities were $5.56 million, including operating lease liabilities; the filing reports no convertible notes payable at year-end. Operating cash burn substantially exceeded reported net loss, in part reflecting working-capital movements.
Material changes versus 2017
- Revenue increased 7%, but gross profit declined about 14% as cost of revenue rose 23%. Product sales fell 4%; charging-service revenue and network fees each rose 7%. Other revenue increased, including $331,120 from Low Carbon Fuel Standard credits, whose value depends on market conditions.
- Operating expenses rose to $12.51 million, driven largely by compensation expense increasing 63% to $9.72 million, including substantial stock-based compensation and increased payroll.
- Net loss narrowed sharply, but mainly because other income/expense improved by $76.13 million. The 2018 result included a $5.80 million gain from settling JMJ obligations with Series D preferred stock and favorable changes in fair values; 2017 included large warrant-related and other noncash expenses. The operating loss worsened, so the smaller net loss does not indicate improved operating profitability.
- Cash increased following financing: the February 2018 public offering generated approximately $14.9 million net proceeds, and warrant exercises provided approximately $17.1 million. Common shares outstanding rose from 5.52 million at year-end 2017 to 26.12 million at year-end 2018.
Outlook, risks, contingencies, and unusual items
- Management said year-end cash was sufficient for operating and capital needs for at least 12 months from the filing date, but anticipated needing additional financing thereafter; no future financing commitments were in place. The company had not achieved profitability and warned that inadequate financing could force it to curtail activities or discontinue operations.
- Planned growth priorities include expanding equipment deployments and sales channels, developing next-generation chargers, and pursuing occupancy fees, subscriptions, and advertising. No quantified revenue or profitability guidance was provided.
- Management concluded disclosure controls and internal control over financial reporting were ineffective at December 31, 2018, citing material weaknesses in formalized procedures, segregation of duties, and control monitoring. A new ERP system and outside advisers were part of remediation efforts.
- Risks include continued losses and cash burn, dependence on EV adoption and external financing, intense competition, customer concentration, technology and cybersecurity risks, and potential dilution from warrants and convertible securities. One significant customer represented approximately 35% of accounts receivable at year-end.
- The company reported outstanding purchase commitments for second-generation chargers, but the filing gives conflicting amounts: the financial-statement note says $1.84 million remaining, while another discussion cites $2.51 million. The reported deposit amounts also differ across sections. Verify against the filed financial statements and supplier commitments.
- The company had not filed federal and state corporate income tax returns for 2014–2018, according to the contingency disclosure; approximately $53.7 million of tax-loss carryforwards were unavailable until outstanding returns were filed. It reported that payroll and sales-tax delinquencies had been remedied by year-end 2018.
- The only identified active lawsuit as of the filing date was a vendor claim for approximately $53,069 plus interest and costs; the company denied liability and was proceeding with discovery. Management did not expect pending matters to materially affect its financial position, liquidity, or results.
- The independent auditor gave an unqualified opinion on the financial statements, but did not audit or express an opinion on internal control effectiveness. The company disclosed related-party transactions involving its CEO and affiliated entities, including compensation, commissions, and financing-related arrangements.
Investor facts to verify
- Whether the company can sustain liquidity after its stated 12-month cash runway, given $13.42 million of operating cash use in 2018 and no committed future financing.
- Whether revenue growth and station deployment translate into improving gross margins and operating results, rather than reliance on financing and noncash gains.
- The exact remaining charger purchase commitments and deposits, given inconsistent amounts in the filing.
- Progress in remediating material weaknesses and filing delinquent tax returns, including the status and availability of tax-loss carryforwards.
- Potential dilution and governance implications of outstanding warrants, Series D preferred stock, related-party arrangements, and the CEO’s significant voting ownership.